January 8, 2013UncategorizedComments Off on AirNZ wants fuel storage in West Auckland, ‘Marsden Point at risk of fire, tsunami’

BusinessDesk report by Pattrick Smellie
New Zealand’s only oil refinery, at Marsden Point, is too vulnerable to the risks of a major fire or destruction from a tsunami, says Air New Zealand in a submission on a government review of the country’s transport fuel security arrangements.

The national carrier also suggests the country should abandon its $10 million a year membership of the International Energy Agency, which it says is an anachronism and the money should be spent investing in more robust domestic fuel storage and transport infrastructure.

The submission calls for the creation of a new, standalone fuel storage facility in West Auckland to augment the existing major storage facility at Wiri, in South Auckland. It proposes the new facility be used for ground-based transport fuels while Wiri would solely store jet fuel for use at Auckland International Airport.

The airline approached the oil companies in 2005 with the proposal, but says it now considers “the oil industry collectively will not act to develop a coherent medium-term strategy and undertake new investments that have medium term benefits.”

Commenting on risks in current infrastructure, Air NZ says the Marsden Point refinery’s various elements “interface into each other”, which “makes the complex vulnerable to a fire in, say, the refinery impacting the ability to import fuels over the wharf or to operate the storage facilities, or send fuel down the RAP (refinery to Auckland) pipeline.”

“Fires do happen in well run refineries,” the submission says, so ensuring the refinery can operate in the event of a fire “is a critical aspect to enhancing New Zealand’s fuel supply security.”

Likewise, the government’s discussion document underplayed the risk to fuel security of a fire at the Wiri terminal, which the airline describes as “the most at risk asset that has the potential to cause the biggest long term problem.”

The vulnerability of Marsden Point to tsunami damage should also not be lightly discounted, the airline says.

The Air NZ submission takes a swipe at the inability of the four major oil companies to work together in customers’ best interests, saying they had been unable to provide a single data file for the airline’s monthly fuel purchases from all four. Similar examples existed in fuel storage infrastructure.

“The government needs to take a more active strategic interest in in promoting sensible economic outcomes for the supply infrastructure for petroleum fuels.”

In similar vein, the only New Zealand-owned fuel company of the big four, Z Energy, argues there is a “rare case for an element of government co-ordination in designing an investment framework and programme” to update the country’s ageing and inadequate fuel storage and transport arrangements.

Several submissions also call for protection of the Wiri site as a site for transport fuel storage, warning of serious risks if new land uses that could compromise its role as a dangerous goods storage site were permitted.

The submission from the oil company-owned Wiri operation, Wiri Oil Services, says planning is under say to build new storage tanks on the same site but at a distance from existing storage. As a result, one part of the facility could keep operating if a fire or disruption in the other part threatened security of fuel supplies.